- What Think tank executive resident Mike Moffatt has been on the offensive against development cost charges
- Why Moffatt says such charges are worsening the housing crisis
- What next Some municipalities have started to reduce their fees for new builds
Mike Moffatt is trying to turn the tide against rising development cost charges, one politician at a time.
The Founding Director of PLACE Centre, part of a think tank at the University of Ottawa, Moffatt has been on a campaign in recent months to highlight the damage he says development cost charges have done to Canada’s housing market.
The charges add to the costs that homeowners and apartment building owners have to bear for new properties, he argues. That’s driving prices up and new builds down, worsening the country’s housing crisis.
“This is something industry has been talking about for a long time now, and it’s often dismissed as developers wanting a tax break, which I’m sure they do,” he told Green Street News. “But that actually is a lot of money. They’ve gone up 1,000% to 2,000% in the last 20 years.”
Spreading the word
For the past few months, Moffatt has been taking to Linkedin to lay out his arguments – and he’s getting some traction. Elected officials and others have been speaking to him about the problem privately, with mixed results.
“I would say at least three times a week, I’m having conversations with someone,” he said. “It runs the gamut. I suppose that’s to be expected. Here in Ontario, we have 444 different municipalities, so there’s a wide spectrum of opinions and viewpoints.”
Two Ontario cities that Moffatt has met with or influenced, Vaughan and Burlington, have recently announced they would lower DCCs.
Burlington Mayor Marianne Meed Ward said the public conversation around DCCs against the backdrop of Canada’s affordability crisis caused her city council to rethink its charges.
“We looked at legacy projects that require upper-level government approval that had not advanced, even to the planning stages let alone construction,” Meed Ward said. “We don’t know if they’re going to advance in the next decade or more, so there’s no need for us right now to be collecting for that.”
As a result, the city was able to reduce fees by 15% through taking three projects valued at $146m off the books. But Meed Ward stressed DCCs are an important way to raise funds for infrastructure.
“You can’t just take it out of the equation. Things still need to be paid for,” she said. “This is an important source of funding for community amenities.”
A nationwide issue
Moffatt is hoping other municipalities wake up to damage he says the fees are causing. Those that don’t will be hit with economic realities of keeping them high, he said.
“You can charge a really high rate, but if you have no housing starts, then your revenue is zero,” he said. “I think you are going to start to see a little more competition in this area as cities try to find ways to bring these to reasonable levels.”
Moffatt isn’t the only one taking a strong stance against the fees. While the situation is perhaps most acute in Ontario, industry players and developers in British Columbia also have been drawing attention to the issue.
In Vancouver, Wesgroup Properties led a charge in September against the fees as the region’s metro authority is preparing to hike them next year. The developer wrote a letter to the Metro Vancouver Regional District Board, and others signed on, expressing concern about the planned increase.
Wesgroup’s senior vice president of development, Brad Jones, told Green Street News that higher charges will mean less construction in the city.
